Microsoft is quietly shopping for an OpenAI replacement

This article was published on May 14, 2026 The company that put $13bn into OpenAI now wants the option not to need it. Cursor was the first try and fell apart over GitHub Copilot; talks with Stanford diffusion-LLM startup Inception are alive, and the broader strategy belongs to Mustafa Suleyman. Reuters reported on Wednesday, citing five people familiar with the matter, that the company has been quietly canvassing AI startups for acquisitions or strategic deals as it builds out the option to operate without OpenAI. Three weeks after rewriting the contract that bound it to OpenAI for the better part of a decade, that option is no longer theoretical. The most concrete attempt so far ended in retreat. This spring, Microsoft weighed buying Cursor, the code-generation startup whose annualised revenue went from zero to $2bn in three years, then walked away. The internal verdict was that owning GitHub Copilot and acquiring Cursor at the same time was a regulatory fight Microsoft did not want to pick. Days later, Elon Musk’s newly merged SpaceX-xAI vehicle bought a $60bn option on Cursor instead, with a $10bn breakup fee attached. The losing bidder paid nothing, kept Copilot, and lost the